Retail banks are undergoing one of the biggest shake-ups in their history as new, digital-only rivals move in on their customers.
As the likes of Amazon, Google, and Apple threaten to move into finance, traditional banks are struggling to compete. Today, they must either redesign or die, as customers look for increasingly sophisticated digital experiences – a demand they’re failing to meet.
In late 2015, Beyond – an experience design agency – surveyed British banking customers to pinpoint the areas of the digital banking experience that most urgently need improvement, in order to fend off competition from digital rivals.
The research found that banks have much to do to bring their digital products up to speed. Customers wanted improvements to even the most basic areas of the digital banking experience, naming the following as areas for attention:
Speed and ease
Banking customers want to increase the speed and ease of their digital banking services, with 56 percent saying they want faster ways to transact online and 51 percent seeking easier ways to log into accounts.
Both are fundamental to a smooth customer experience, but banks must take care when attempting to improve them. In many cases, software already exists to improve both, but has been held back due to customer anxiety – speedy log-in processes, for example, are sometimes believed to lack safety and sophistication because customers cannot see the security processes working under the hood.
This anxiety must be taken into account when improving speed and ease in digital banking, as a process that seems too fast and too easy can make customers feel their security is not being taken seriously.
Privacy and security are hot topics amongst consumers, and when money is concerned, feelings run even higher. This is especially true when high-profile data breaches are in the news.
As technology grows, so can risk. Faster transactions, for example, have made life easier for both consumers and fraudsters. Banking customers feel this keenly – 65 percent wanted additional levels of security for the digital banking experience, making it by far their greatest concern.
Perhaps surprisingly, banking customers were less wary about the use of their personal data – as long as it meant an improvement in the quality of their banking experience.
Customers said they’d be interested in sophisticated banking tools, built on their individual data and responding to their needs. In particular, 53 percent wanted to trial digital products that could help them save money, based on their data.
Evidently, the current ‘one size fits all’ digital experience is not enough for customers now used to the personalised world glimpsed through interactions with the likes of Amazon and Google.
The areas pinpointed above are fundamental to the quality of any digital experience. Given the speed of change in the sector, fixing these elements gives only a sticking-plaster solution, meeting today’s demands but failing to anticipate longer-term changes in retail banking. The gap is rapidly widening between the experience offered by the banks, and that which established tech companies are capable of delivering.
Banks urgently need to go further, designing transformational product sets in order to ensure their futures. But how can they do this? It takes an agile approach to innovate, and banks are notorious for their complex processes and sluggishness in taking on certain creative challenges.
In short, existing design practices need a complete overhaul. The following tips should offer a good place to start:
Mix the digital with the physical
Consumers show a clear appetite for self-service, from using ATMs to making payments online. However, when it comes to making major financial decisions, they often want genuine assurance that they’re making the right decisions.
In the battle for banking customers, banks do have one advantage over their digital rivals – the branch. The more complex the financial product, the harder it is to convert customers through a purely digital channel. While countless start-ups are trying to find the formula to automate this, humans are still needed.
Banks ought to look to their branches as a crucial weapon in the fight to retain customers, reworking them as part of a seamless cross-platform experience.
Use data to uncover points of friction
Established technology companies benefit from huge sets of behavioural data, which offers them with a deep understanding of their customers’ online activity. This allows them to create sophisticated digital experiences, anticipating decisions based on past actions.
Banks own a wealth of data on their customers’ financial habits, but behavioural data of this kind is often lacking.
To understand how best to improve the digital banking experience, banks must first break down the customer journey, using behavioural data to pinpoint areas of friction and see the experience through the customer’s eyes.
Launch quickly and test
A test-and-learn approach might appear to be the antithesis of the way many large banks work. But often, this tactic can actually be an excellent way to mitigate risk and ensure better outcomes, particularly when the competition is evolving so quickly.
Product development approaches like the minimum viable product (MVP) present a huge opportunity for innovation. They enable organisations to get rapid feedback on new offerings, which they can then iterate, and help avoid the development of products and features that do not meet customers’ needs.
When this approach is used with independently-developed, experimental product sets, it can enable the organisation to optimise and learn faster, avoiding costly mistakes down the road.
Small changes are better than no change at all, particularly when customer expectations are evolving so rapidly. Instead of waiting for a major overhaul, it can sometimes be better to improve digital offerings more gradually.
Once transformational adjacent products have been trialled successfully, banks can then apply the innovations to existing core products – the ones that really matter.
The research found that the threat from digital challengers is real, and it is substantial. 64 percent of UK consumers would consider an online-only service for all of their banking needs – rising to 79 percent for services like payments and international transfers.
Though it will be difficult for banks to take on this challenge, the findings are clear – if they cannot improve their basic digital offerings, they face losing their grip on an industry they’ve traditionally dominated.